2.5.18

Apple reports higher profits, unveils big share buyback

Apple reported a hefty jump in second-quarter earnings Tuesday and
unveiled a new $100 billion share buyback plan, alleviating worries
about the iPhone's prospects and a hit from US-China trade tensions.
Apple shares rose decisively after the report, which beat analyst
expectations in terms of profit and sales. The company notched higher
revenues in all regions and across most product categories, although
iPhone sales lagged expectations.
Apple chief executive Tim Cook offered a bullish outlook on the
company, touting the company's product pipeline as the "best we've ever
had" and championing good sales of the iPhone 10, a recently unveiled
model whose $1,000 price tag has aroused worries about being too high.

Shares jumped on the report, rising 3.8 percent to $175.49 in after-hours trading.
Earnings for the quarter ending March 31 rose 25.3 percent rise in
earnings to $13.8 billion following 15.6 percent increase in revenues to
$61.1 billion.
The company, flush with a huge cash pile on strong earnings enhanced
by the US tax cut plan of 2017, announced $100 billion in new share
buybacks plus a 16 percent boost to its quarterly dividend.
Chief financial officer Luca Maestri told an analyst conference call
that the company would undertake the share purchases at "a very fast
pace," but that the schedule would depend on market dynamics.
Analysts especially praised a big jump in revenues in Apple's
services business, which is seen as an important element of
diversification away from having revenues tied to gadgets.
A 31 percent rise in services to $9.2 billion followed big jumps in Apple Pay, Apple Music and other programs.
Angelo Zino, analyst at CFRA Research said the gain was evidence of
"significant increase in paid subscriptions within (Apple's) ecosystem." Saturated smartphone market?
Sales of iPhones, which account for nearly two-thirds of company
revenues, rose during the quarter, although total volume came in at 52.2
million units, a bit below consensus estimates of 53 million.
Neil Saunders, managing director of Global Data Retail, pointed to
"some less satisfactory nuances" in the Apple's iPhone data in spite of
the positive headline figure.
"That unit growth is well below the run rate for new phone launches,
signals that the replacement cycle is slowing down," Saunders said. "In
essence, we maintain our view that Apple is struggling to persuade many
consumers to update their phones."
"No matter how Apple tries to spin it, the iPhone X is essentially an
incremental product that lacks the excitement and newness earlier
models brought to the market," Saunders said.
But Cook noted that the iPhone 10 was its topseller during the
quarter, including in key markets like China, saying "I could not be
prouder of the product."
Cook also downplayed talk that the smartphone market lacks
significant room for growth, noting tremendous upside still exists in
key markets in India and more broadly among the large population that
still hasn't bought the gadget.
"I don't buy the view that the market is saturated," Cook said. Optimistic on China
Apple has been seen as vulnerable to in the wake of intensifying
rhetoric and threats between Washington and Beijing that have raised
worries of a trade war.
Cook downplayed anxiety about a commercial meltdown between the two
superpowers, saying the countries have an "unavoidable mutuality" based
on economic interdependence.
"I don't know how every blow by blow plays out," he said, but "over
time" he expects his "very optimistic" outlook on the long-term
relationship would be validated.
Analysts were encouraged by Apple's third-quarter outlook, which
included projected revenues of $51.5 billion to $53.5 billion, implying
it could top analyst forecasts for $52.0 billion.